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Which US taxes does a foreign-owned domestic Delaware LLC has to pay?

Asked by: Wanda - 25 May, 2012 If I am not mistaken, LLCs in the US are facing 4 different categories of taxes:

-Federal income taxes 15-35%
-State taxes
-Self-employment taxes 15.3%
-LLC Franchise tax ($250 in Delaware)

Now I get conflicting answers as to which of these a Delaware LLC has to pay if set up as follows:

-Domestic Delaware LLC
-But 100% foreignly owned
-2 members, both non-resident aliens
-only providing consulting services outside of the US

Depending on the chosen taxation method, Partnership vs Corporate, which ones would the Delaware LLC have to pay in the US?

My assumption is:

Partnership taxation:
- federal income taxes NO
- state taxes NO
- self-employment taxes NO (non-resident aliens)
- Franchise tax YES

Corporate taxation:
- federal income taxes YES (?)
- state taxes NO
- self-employment taxes NO (non-resident aliens)
- Franchise tax YES

Could you shed some light on that?

Many thanks in advance
Answered by: Ray Albert - 26 May, 2012 Wanda,

An LLC is a pass-through entity, meaning the profits are passed through the entity directly to the owner's personal income, so the LLC itself will not pay it's own income taxes. Regardless where the owners reside, the $250 state franchise tax will apply as long as the business is registered with the state of Delaware.

If you elect the LLC to be taxed as corporation you are looking to pay federal tax on all income produced in the US, and Delaware state tax on profit produced in Delaware. Partnership typically pays no tax on company level.

While we are professional incorporators, we are not professional accountants. It would be a very good idea to consult an accountant who is familiar with international taxation laws and procedures to know for sure if you would have any personal tax obligations to the US federal IRS, as well as on your personal income in your home country. 


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